In January 2025, average auction prices jumped by 9.4% in just one month. So what's going on, and how might this affect your car insurance?
Why Are Used Car Values Going Up?
The main reason is simple: there aren't enough used cars to go around. During the COVID pandemic, factories made far fewer new cars. This means there's now a shortage of good quality used cars that are three to five years old - the ones most people want to buy.
When fewer cars are available, prices go up. Industry experts say this shortage will continue through 2025 and into 2026, keeping used car values higher than normal. Cars are also selling faster than before, with the average used car leaving the forecourt in just 33 days in December 2024.
What Does This Mean for Your Car Insurance?
Higher car values mean higher insurance costs. When insurers work out your premium, they look at how much it would cost to replace your car if it's written off. If used cars cost more, your insurance will likely cost more too.
This comes at a tricky time. Car insurance premiums have already been high, with the average UK driver paying £635 in early 2024 - though prices have started to drop slightly. The good news is that as used car prices settle, insurance costs should become more stable.
Get the Best Deal on Your Insurance
With used car values changing, it's more important than ever to shop around for car insurance. Different insurers value cars differently, so comparing quotes could save you money. Use the free comparison tool to check prices from leading UK insurers - it takes just a few minutes and could help you find better value cover for your car.
Whether you're buying a used car or renewing your policy, understanding these market changes helps you make smarter choices and keep your motoring costs under control.
Sources
Fleet News - Positive outlook predicted for used car market in 2025 (January 2025)
https://www.fleetnews.co.uk/news/positive-outlook-predicted-for-used-car-market-in-2025
Motor Finance Online - UK used car prices surge in January 2025, BCA reports (March 2025)
https://www.motorfinanceonline.com/news/uk-used-car-prices-surge/
Plan Insurance - UK Used Car Market Trends for 2025: A Record Start (April 2025)
https://www.planinsurance.co.uk/blog/uk-used-car-market-trends-for-2025-a-record-start/
Association of British Insurers - Motor premiums stabilise but cost to insurers mount (Q1 2024)
https://www.abi.org.uk/news/news-articles/2024/4/motor-premiums-stabilise-but-cost-to-insurers-mount/
Learn about the rules and requirements for learning to drive with your parents. Find out what you need to know before getting behind the wheel with a family member.
If you've been driving claim-free for a few years, you've probably built up a valuable no claims bonus (NCB). Should you pay extra to protect it? Let's look at what protection offers and whether it's worth the cost.
Choosing the right car can save you hundreds of pounds on insurance every year. Some cars cost much less to insure because they're safer, cheaper to repair, and less likely to be stolen.
